Pegasystems Announces Financial Results for Fourth Quarter and Fiscal Year 2014
GAAP License and Cloud Revenue increases 24% in 2014;2014 GAAP EPS of $0.42; 2014 Non-GAAP EPS of $0.74
CAMBRIDGE, Mass. – February 26, 2015 – Pegasystems Inc. (NASDAQ: PEGA), the software company empowering the world’s leading enterprises with strategic business applications, today announced results for its fourth quarter and full year ended December 31, 2014.
"This was a solid quarter for Pegasystems, capping off what was a strong year overall for the company," said Alan Trefler, Founder and CEO of Pegasystems. "Our 2014 GAAP license revenue of $232 million represents a 21% increase compared to last year. We exceeded our original, full year GAAP revenue guidance of $576 million, ending the year with $590 million in total GAAP revenue, a 16% increase over 2013. Our strength in marketing, sales and onboarding, and customer service is driving business growth across the globe. We’re pleased our clients recognize the value we bring in transforming their customer relationship management initiatives and proud of the results our clients are achieving with our software."
"As previously discussed, we began a transition we are very excited about in the second half of 2014," continued Mr. Trefler. "We have evolved our market positioning and have been enhancing our products to target a broader range of clients we believe represent a significantly larger long-term revenue opportunity. We expect to continue our investment in 2015 in marketing and product development and reallocate our resources to pursue a more repeatable and scalable sales model, consistent with the value we believe our technology can bring to a broader market."
Cash: Total cash, cash equivalents, and marketable securities at December 31, 2014 was $211.2 million, up 35% from December 31, 2013.
Cash generated from operations for the full year 2014 was $99.9 million, an increase of 24% on a year-over-year basis. Free Cash Flow, which we define as operating cash flow less Cap Ex, was $88.4 million for 2014, an increase of 18% on a year-over-year basis.
License and Cloud Backlog: The Company computes license and cloud backlog by adding billed deferred license and cloud revenue and off-balance sheet license and cloud commitments, which is business that is contracted, unbilled, and not recorded on the Company’s balance sheet.
"We are pleased with our performance in 2014," said Rafe Brown, Pegasystems CFO, "and with continued application enhancements, a strong customer base, and increased marketing to develop new customers, we believe the company is positioned for growth in 2015 and beyond. Our confidence is reflected in our 2015 total revenue guidance, which contemplates license and cloud revenue growth continuing to grow much faster than our professional services revenue."
Business Outlook: As of February 26, 2015, Pegasystems is initiating revenue and EPS guidance for fiscal year 2015 as follows:
Full Year 2015 Revenue: GAAP and non-GAAP revenue for the full year 2015 is projected to be approximately $653 million.
Full Year 2015 Earnings Per Share: GAAP diluted earnings per share for the full year 2015 is expected to be approximately $0.49. Non-GAAP diluted earnings per share for the full year 2015 is expected to be approximately $0.78.
See the reconciliation of our GAAP diluted EPS guidance to non-GAAP diluted EPS guidance for the full year of 2015 at the end of this release.
Quarterly Conference Call
Pegasystems will host a conference call and live Webcast associated with this announcement at 5:00 p.m. EST today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company's Website at https://www.pega.com/about/investors. Dial-in information is as follows: 1-877-407-3982 (domestic) or 1-201-493-6780 (international). To listen to the Webcast log onto www.pega.com at least 5 minutes prior to the event's broadcast and click on the Webcast icon in the Investors section. A replay of the call will also be available on www.pega.com in the Investors section Earnings Call Archive link.
Discussion of Non-GAAP Financial Measures:
To supplement financial results presented in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP"), the Company provides non-GAAP measures, including in this release. Pegasystems' management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions, and for forecasting and planning for future periods. The Company's annual financial plan is prepared both on a GAAP and non-GAAP basis, and both are approved by our board of directors. In addition and as a consequence of the importance of these measures in managing the business, the Company uses non-GAAP measures and financial performance results in the evaluation process to establish management's compensation.
The non-GAAP measures exclude the effects of certain business combination accounting entries, stock-based compensation expense, amortization of acquired intangibles, acquisition-related costs, and restructuring expenses. The Company believes that these non-GAAP measures are helpful in understanding its past financial performance and its anticipated future results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of the Company's GAAP to non-GAAP measures is included in the financial schedules at the end of this release.
"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained in this press release may be construed as "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including our guidance regarding 2015 GAAP and non-GAAP revenue and diluted earnings per share. The words "expect," "anticipate," "intend," "plan," "believe," "could," "estimate," "may," "target," "strategy," "is intended to," "project," "guidance" and similar expressions, among others, identify forward-looking statements, which speak only as of the date the statement was made. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause the Company's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties include, among others, variation in demand for our products and services and the difficulty in predicting the completion of product acceptance and other factors affecting the timing of our license revenue recognition, the ongoing consolidation in the financial services, insurance, healthcare, and communications markets, reliance on third party relationships, the potential loss of vendor specific objective evidence for our time and materials professional services arrangements, the inherent risks associated with international operations and the continued weakness in international economies, foreign currency exchange rates, the financial impact of the Antenna acquisition and any future acquisitions, and management of the Company's growth. Further information regarding these and other factors which could cause the Company's actual results to differ materially from any forward-looking statements contained in this press release is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and other recent filings with the Securities and Exchange Commission. These documents are available on the Company’s website at https://www.pega.com/about/investors. The forward-looking statements contained in this press release represent the Company's views as of February 26, 2015. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause the Company's view to change, except as required by applicable law, the Company does not undertake and specifically disclaims any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events or otherwise. The statements should therefore not be relied upon as representing the Company's view as of any date subsequent to February 26, 2015.
Pegasystems Inc. is the leader in software for customer engagement and operational excellence. Pega’s adaptive, cloud-architected software – built on its unified Pega® Platform – empowers people to rapidly deploy, and easily extend and change applications to meet strategic business needs. Over its 30-year history, Pega has delivered award-winning capabilities in CRM and BPM, powered by advanced artificial intelligence and robotic automation, to help the world’s leading brands achieve breakthrough business results. For more information on Pegasystems (NASDAQ: PEGA) visit www.pega.com.
All trademarks are the property of their respective owners.
The information contained in this press release is not a commitment, promise, or legal obligation to deliver any material, code or functionality. The development, release and timing of any features or functionality described remains at the sole discretion of Pegasystems, Pegasystems specifically disclaims any liability with respect to this information.
Lisa Pintchman Rogers
VP, Corporate Communications
Director, Corporate Communications
Sr. Manager, Public Relations
Director, Corporate Communications
+44 (0) 118 9651 660
PR & Communications Manager
+44 (0) 118 9398 584
One Rogers St.
Cambridge, MA 02142
Phone +1 617-374-9600
Fax +1 617-374-9620